Bankruptcy and Inheritance

The bankruptcy laws are in place to give individuals an opportunity to start over again, allowing you to either discharge debts permanently or restructure your obligations with creditors. You may wonder, though, what happens after the bankruptcy is over. Suppose you file for protection, eliminate certain debts and then receive notice some months later that you have inherited a substantial amount of money? Can the bankruptcy court look at future earnings and resources? Is the money yours to keep?

The Impact of a Bankruptcy Filing on a Subsequent Inheritance

The treatment of your inheritance will depend, in significant part, on the type of bankruptcy petition you filed. If you filed for liquidation under Chapter 7, the impact on your inheritance will depend on the amount of time that has passed since your bankruptcy. Under the law, the bankruptcy court can consider any inheritance receive within 180 days (six months) of the filing of your bankruptcy to be part of the bankruptcy estate. It can then be used to satisfy your creditors, unless you can claim it as exempt property. Any inheritance received after that 180 period will not be included in the bankruptcy.

On the other hand, if you filed for protection under Chapter 13 and you are still making payments during the three-to-five year period established by the bankruptcy court, you must disclose any inheritance to the bankruptcy trustee, and must turn over any funds received. If you can’t show that the funds are exempt, they can be used to recalculate your payments to creditors or may actually lead to the termination of bankruptcy proceedings.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.